Sebi, Exchanges Tighten Vigil for Budget Day Trading

Anticipating huge volatility during the special stock market trading on Budget day tomorrow, regulator Sebi and stock exchanges have enhanced vigil to ensure smooth operations.

Last week, Sebi had decided to keep the markets open on the Budget day, despite it being a Saturday, and asked the stock exchanges to put in place necessary systems to conduct trading during normal market hours from 9 am to 3.30 am.

The surveillance systems have been put on high alert, fearing attempts by manipulators to take advantage of high anticipations associated with the Budget, top officials said, adding that markets are expected to witness a huge turnover, including by foreign entities.

Various market entities have also been asked to ring-fence their systems and infrastructure from any sudden volatility.

Many brokers have informed their customers that they are anticipating high market volatility during the period of Budget announcement and therefore they have increased the trading margin requirements for the clients.

Trading volumes and volatility could also be higher on Budget day as overseas markets, including Singapore, where many foreign investors take position before trading begins in India on normal days, would be closed and foreign investors are expected to trade directly on Indian bourses.

Similar arrangements were made last year on the day of the exit poll results as well as the final results of the Lok Sabha elections.

The decision was taken after requests were made by various market entities and others to keep markets open on the Budget day to allow the various proposals to be priced in naturally in the share prices and to avoid any sudden rush on Monday morning when markets would have otherwise opened after a gap of two days.

It was also anticipated that overseas investors in Singapore could have got an early-bird advantage to take positions because of time zone difference. The stock markets are generally closed on Saturdays and Sundays, except for special circumstances.